Omnicell, Inc. (OMCL) Accused of Misleading Investors
According to the complaint for alleged violations of the Securities Exchange Act of 1934 between October 25, 2018 and June 11, 2019, throughout the relevant period, Omnicell, Inc. (OMCL) touted its year-over-year increase in revenue in its quarterly financial reports. However, these financial reports were materially false as Omnicell recognized revenue for certain transactions before fulfilling performance obligations and engaged in improper accounting practices to meet revenue targets. Omnicell also misled investors by failing to disclose that it was experiencing weaker demand for new product lines and would therefore be required to write-off inventory. Then, on July 11, 2019, GlassHouse Research LLC published a report revealing that Omnicell had prematurely recognized $38.3 million in sales that should have been recognized long-term consistent with the company’s performance obligations. The report also alleged that Omnicell’s new product lines were being pushed onto customers to the point where “they are stuffed with products and hesitant to procure any more inventory,” which GlassHouse predicted would require Omnicell to write off $23 million of obsolete inventory. Since this news, Omnicell’s stock has fallen $18.16, nearly 21% and currently trades at $68.36.